A performance appraisal is an important part of performance management. In itself it is not performance management, but it is one of the range of tools that can be used to manage performance.

Since this is usually carried out by line managers rather than HR professionals, it is important that they understand their role in performance management and how performance appraisal contributes to the overall aims of performance management.

How to conduct a performance appraisal

The five key elements of the performance appraisal are:

1. Measurement – assessing performance against agreed targets and objectives.
2. Feedback – providing information to the individual on their performance and progress.
3. Positive reinforcement – emphasizing what has been done well and making only constructive criticism about what might be improved.
4. Exchange of views – a frank exchange of views about what has happened, how appraisees can improve their performance, the support they need from their managers to achieve this and their aspirations for their future career.
5. Agreement – jointly coming to an understanding by all parties about what needs to be done to improve performance generally and overcome any issues raised in the course of the discussion.

There is a view that the content of appraisal discussions should be confidential to the individual and the appraiser. But increasing pressure to provide information to assess the contribution of people to organisational value makes it desirable that performance data be recorded and stored in such a way that it can be used to feed into indicators of human capital value.

Increasingly organisations are putting more emphasis on the kind of behaviour they want their employees to exhibit. Behaviour, particularly management behaviour, has been identified as a significant source of value. They are therefore not solely concerned with the achievement of objectives but how these were achieved.

For example, some organisations are identifying a set of positive management behaviours and then rating against them. Others are identifying the behaviours associated with excellent service and rating against these in the appraisal process. Again the design of the process will depend on what is important to the particular business and the achievement of their business objectives and will therefore be influenced by the wider performance management process. It is important that people don’t achieve their objectives at the expense of their colleagues’ morale.

What a good appraisal looks like

A good and constructive appraisal meeting is one in which:

• appraisees do most of the talking
• appraisers listen actively to what they say
• there is scope for reflection and analysis
• performance is analysed not personality
• the whole period is reviewed and not just recent or isolated events
• achievement is recognised and reinforced
• ends positively with agreed action plans.

A bad appraisal meeting:

• focuses on a catalogue of failures and omissions
• is controlled by the appraiser
• ends with disagreement between appraiser and appraisee.

Related reading: Appraisal Interview Skills